The two qualified domestic limited partnership (QDLP) products — The Eastspring Overseas Investment Asian Credit Debt Bond Private Investment Fund and the Allianz Revenue and Growth Securities Investment Private Fund — recently received approval from Asset Management Association of China (Amac).
The QDLP programme allows foreign managers to raise money in China, with assigned quotas, to invest in offshore traditional and alternative investments, including overseas equity and bond funds, hedge funds and property.
China has been cautious about issuing QDLP quota because the programme takes money offshore and capital outflows could impact the value of the RMB.
Onshore fund activity
Both firms manage two QDLP products and one private fund management (PFM) product, Amac records show. Foreign fund houses with PFM licences can offer funds investing in onshore assets to domestic qualified investors.
In 2018, Eastspring, the asset management arm of Prudential, set up its investment management wholly-foreign owned enterprise (IM WFOE) in Shanghai.
Its PFM product, the Eastspring Investment Private Securities Investment Fund No 1, was registered with the Amac in April last year. Eastspring has 13 staff onshore and registered capital of $17m, according to Z-Ben Advisors.
In September last year, Allianz GI registered its first PFM product, the Allianz Multi-Asset Opportunity No. 1 Securities Investment Private Fund, FSA previously reported. In China, Allianz GI has 6 employees and registered capital of $13.4m,
FSA contacted the two firms, but Eastspring was not able to reply in time for publication and Allianz GI declined to comment.
Private fund launches
Foreign fund houses have been quietly launching PFM products onshore to target qualified investors. There are around two dozen foreign PFM licence holders that have launched 63 onshore funds as of 3 January this year, according to Amac records.
Among them, UBS Asset Management has the most PFM products with nine, followed by Value Partners which manages eight funds and British quant fund manager Winton Capital which runs seven onshore products, Amac records show.
Most recently, New York-based Neuberger Berman registered its fifth PFM product.
At the end of 2019, Nomura Asset Management, UBS AM and Fullerton Fund Management also received approval from the Amac for their onshore funds.
Hong Kong-based BEA Union Investment’s WFOE in Shenzhen received PFM licence from the Amac earlier this month. The firm now has six months to launch an onshore fund, FSA previously reported.